U.S. Mortgage Applications Fall Again as Interest Rates Jump
by:Tom Moeller
|in:Economy in Brief
Summary
- Purchase & refinancing applications drop sharply.
- Effective interest rates jump, highest since 2000.
- Average loan size declines again.
Mortgage applications fell 4.2% (-31.6% y/y) in the week ending August 18 following a 0.8% decline during the prior week according to the Mortgage Bankers Association's Weekly Mortgage Applications Survey. It was the fifth consecutive weekly decline. Applications remain near the lowest level since early-1997.
Applications for purchase loans weakened 5.0% (-30.0% y/y) in the latest week following a 0.3% slip in the previous week. Applications for loan refinancing fell 2.8% (-34.9% y/y) after falling 1.9% in the prior week. Both were the seventh drop in the last eight weeks.
The effective interest rate on a 30-year fixed-rate loan of 7.54% last week was significantly higher than 7.36% in the prior week. It stands markedly higher than its 6.79% level at the end of last year. The rate on a 15-year fixed-rate mortgage of 6.98% jumped from 6.80% in the previous week. The rate on a 30-year Jumbo loan surged to 7.51% from 7.27% in the prior week. The rate on a 5-year ARM loan rose to 6.89% from 6.74% in the week of August 11.
The share of applications for refinancing an existing loan rose to 29.5% of total applications in the week of August 18. It was the highest share in six months, but was down from highs near 75% early in April 2020. The adjustable-rate mortgage (ARM) share of activity of 7.6% in the latest week compared to a low of 5.9% four weeks earlier.
The average size of a mortgage loan dropped sharply to $362,600 (-0.3% y/y) last week, down from a high of $395,000 in the first week of May. It remained higher than the average of $347,600 at the end of last year. The average size of a purchase loan fell to $407,700. It was 0.3% higher y/y. The average size of a loan to refinance a mortgage rose to $254,500 (-5.4% y/y) from $251,900 in the prior week.
The Mortgage Bankers Survey covers 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks, and thrifts. The base period and value for all indexes is March 16, 1990=100. The figures for weekly mortgage applications and interest rates are available in Haver's SURVEYS database.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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